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TO: |
Board of Trustees |
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THROUGH: |
Jay Fox, Executive Director |
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FROM: |
Viola Miller, CFO |
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PRESENTER(S): |
Rob Lamph, Assistant Treasurer |
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Randall Larsen, Gilmore Bell |
TITLE:
title
R2023-12-04 - Resolution Authorizing the Financing of Transit Vehicles through the 2023 Equipment Lease-Purchase Agreements, and Related Matters
end
AGENDA ITEM TYPE:
Resolution
RECOMMENDATION:
Approve resolution R2023-12-04 authorizing the financing of eligible equipment through a 2023 Lease-Purchase Agreement that includes approving the bid of Banc of America Public Capital Corp, as lessor to the Master Lease, approving a 2023 Schedule to the Master Lease (the “2023 Schedule”), and delegating to certain officers the authority to approve.
BACKGROUND:
In April 2023 the finance team came to the board with the intent to lease. The lease needs at that time were estimated at:
14 Year $32,500,000
10 Year $4,000,000
8 Year $1,500,000
6 Year $10,500,000
Total $48,500,000
UTA has been leasing buses, cutaways and vanpool vans since 2015.
Previously UTA entered into single year lease agreements for the purchase of vehicles but determined that a multi-year contract will be more advantageous to the Agency.
A 5-year Master Lease was put in place in 2022 to allow UTA to mirror its 5-year replacement plan for buses and the 5-year Capital Plan by securing the lease rates based on an index plus an agreed to percentage for 2022-2026.
DISCUSSION:
As of October 2023, the needed lease amounts for 2023 will be in escrow by Zions at current Public Treasurer Investment Fund (PTIF) rates as follows:
14 Year $15,684,868
10 Year $10,000,000
8 Year $2,898,000
6 Year $0*_________
Total $28,582,868
*No additional lease funds were needed for this six-year lease option.
Banc of America’s lease rate for the 2023 lease will be as follows:
• 14-years 4.3148%
• 10-years 4.0459%
• 8-years 4.0805%
Through this resolution the Board is being asked to approve the 2023 Tranches of Equipment Lease Purchase Agreement, and the 2023 Schedule to the Master Lease. We will return to the board annually for approval of future year tranches of lease funds.
ALTERNATIVES:
Go out for a new RFP. This would result in UTA losing the rate lock currently agreed upon. This could also drive the choice to not lease vehicles but instead paying cash for all purchases which would affect the 5-year financial plan by the loss of generated interest in the PTIF.
FISCAL IMPACT:
The fiscal impact for 2023 Leases would be approximately $7,852,871.80 in interest expense over the life of the 14, 10 and 8-year leases. This interest amount paid is lower than the interest generated by the funds held in Escrow in the PTIF.
The principal amount of the Leases would be approximately $28,582,868, with a total Lease expense of $36,435,740.
ATTACHMENTS:
Resolution R2023-12-04